Lecture 12 - Feb. 18th, 2019
Britain's Repeal of the Corn Laws 1846
Cheryl Schonhardt-Bailey, “Specific Factors, Capital Markets, Portfolio Diversification and Free
Trade”, Scott James and David Lake, “The Second Face of Hegemony”
Lecture Notes
Repeal of the Corn Laws
Peel’s Puzzling Reform
- The first time a major economic power adopted free trade; had many consequences for
the policies of other states.
- Sir Robert Peel: Prime Minister of Britain in the 1840s
- Known as a reformer in many respects, though he was a conservative
- The repeal of the corn laws was both the culmination and the disastrous end of his
career
- While making a number of reforms, Peel was opposing more radical changes
The Puzzle: Sir Robert Peel Repeals the Corn Laws
- Corn Laws = tariff on grain entering Britain
- At the time, the working class lived primarily off of bread.
- The Corn Laws were set up centuries earlier; they were part of mercantilist
practices established in the 1600’s that continued through to the 1800’s.
- Were a way to collect taxes (mercantilism emphasized the importance of keeping
hard currency inside your borders)
- There was also a notion of realist thinking that Britain had to be self-sufficient in
food supply; when war came (especially wars against the Dutch or French) Britain
needed to be able to supply its own citizens with food.
- To encourage British landowners to grow wheat, place a tariff on wheat
- Mercantilism in general was under criticism at the time (Adam Smith writing in
the 1770s, David Ricardo in the early 1800s) for stunting economic growth in
Britain
- *Adam Smith himself said there were some reasons why you would not want to
rely on a market based arrangement, and those have to do with national defense.
- However, you may want to leave tariffs in place for certain things,
including food, for good reason. He did not advocate free trade in food
- Two major parties:
- Conservatives (Tories) led by Sir Robert Peel
- Whigs (who will become the Liberals)
, - Parties (as we understand them) were just starting to emerge in the
1830s/40s; they were a lot looser, less party discipline, etc.
- The Radicals wanted even more change than the other two parties
- One of the big issues was what to do about the corn laws: the tariffs on
wheat are too high, which means that the price of bread is too high
- Peel wins 1841 election
- The conservative party platform in 1841 did not advocate changing the corn laws
- Peel was elected on the basis of this platform. What he wanted to do was fix the
government budget.
- In 1842 budget, Peel reduces many tariffs
- The tariffs that had been raised in the past decades were so high that they were
deterring goods from coming into Britain.
- Peel was thinking about the tax aspect of this: if no goods are coming in, you
can’t collect taxes
- Peel and his advisors reduced tariffs in a way that would encourage some trade to
take place
- Were able to balance the budget (still in debt, but were able to run surpluses some
years/pay down the debt, etc.)
The Puzzle: Sir Robert Peel Ends the Corn Laws
- Peel’s government balances the budget
- Corn Laws remain focus of debate
- Britain had industrialized in the last few decades, railroad lines were being built`
- Potato Famine in Ireland begins in 1845
- At the time, Ireland was controlled by Britain and very poor
- Potatoes were a primary food source, however crops were damaged in the winter
- Peel and his advisors tried to figure out how bad this problem would be: would it
be temporary?, spread elsewhere? Would it affect other parts of the British United
Kingdom?
- Peel asks cabinet in 1845 if they should do something to end the corn laws.
- It was clear that the government needed to do something for Ireland; Peel realized
that this may mean the government would have to purchase maize from the U.S.
to give away in Ireland
- Peel concern: could they do this while still justifying charging British people such
a high price for imported wheat?
- Received a mixed reaction from his cabinet (at the time, they did not know the
entire scale of the issue in Ireland - won’t until a year later)
- Some argued that the Corn Laws were central to British self-sufficiency,
have been around for a long time
Britain's Repeal of the Corn Laws 1846
Cheryl Schonhardt-Bailey, “Specific Factors, Capital Markets, Portfolio Diversification and Free
Trade”, Scott James and David Lake, “The Second Face of Hegemony”
Lecture Notes
Repeal of the Corn Laws
Peel’s Puzzling Reform
- The first time a major economic power adopted free trade; had many consequences for
the policies of other states.
- Sir Robert Peel: Prime Minister of Britain in the 1840s
- Known as a reformer in many respects, though he was a conservative
- The repeal of the corn laws was both the culmination and the disastrous end of his
career
- While making a number of reforms, Peel was opposing more radical changes
The Puzzle: Sir Robert Peel Repeals the Corn Laws
- Corn Laws = tariff on grain entering Britain
- At the time, the working class lived primarily off of bread.
- The Corn Laws were set up centuries earlier; they were part of mercantilist
practices established in the 1600’s that continued through to the 1800’s.
- Were a way to collect taxes (mercantilism emphasized the importance of keeping
hard currency inside your borders)
- There was also a notion of realist thinking that Britain had to be self-sufficient in
food supply; when war came (especially wars against the Dutch or French) Britain
needed to be able to supply its own citizens with food.
- To encourage British landowners to grow wheat, place a tariff on wheat
- Mercantilism in general was under criticism at the time (Adam Smith writing in
the 1770s, David Ricardo in the early 1800s) for stunting economic growth in
Britain
- *Adam Smith himself said there were some reasons why you would not want to
rely on a market based arrangement, and those have to do with national defense.
- However, you may want to leave tariffs in place for certain things,
including food, for good reason. He did not advocate free trade in food
- Two major parties:
- Conservatives (Tories) led by Sir Robert Peel
- Whigs (who will become the Liberals)
, - Parties (as we understand them) were just starting to emerge in the
1830s/40s; they were a lot looser, less party discipline, etc.
- The Radicals wanted even more change than the other two parties
- One of the big issues was what to do about the corn laws: the tariffs on
wheat are too high, which means that the price of bread is too high
- Peel wins 1841 election
- The conservative party platform in 1841 did not advocate changing the corn laws
- Peel was elected on the basis of this platform. What he wanted to do was fix the
government budget.
- In 1842 budget, Peel reduces many tariffs
- The tariffs that had been raised in the past decades were so high that they were
deterring goods from coming into Britain.
- Peel was thinking about the tax aspect of this: if no goods are coming in, you
can’t collect taxes
- Peel and his advisors reduced tariffs in a way that would encourage some trade to
take place
- Were able to balance the budget (still in debt, but were able to run surpluses some
years/pay down the debt, etc.)
The Puzzle: Sir Robert Peel Ends the Corn Laws
- Peel’s government balances the budget
- Corn Laws remain focus of debate
- Britain had industrialized in the last few decades, railroad lines were being built`
- Potato Famine in Ireland begins in 1845
- At the time, Ireland was controlled by Britain and very poor
- Potatoes were a primary food source, however crops were damaged in the winter
- Peel and his advisors tried to figure out how bad this problem would be: would it
be temporary?, spread elsewhere? Would it affect other parts of the British United
Kingdom?
- Peel asks cabinet in 1845 if they should do something to end the corn laws.
- It was clear that the government needed to do something for Ireland; Peel realized
that this may mean the government would have to purchase maize from the U.S.
to give away in Ireland
- Peel concern: could they do this while still justifying charging British people such
a high price for imported wheat?
- Received a mixed reaction from his cabinet (at the time, they did not know the
entire scale of the issue in Ireland - won’t until a year later)
- Some argued that the Corn Laws were central to British self-sufficiency,
have been around for a long time
